Liberate Technologies’ statement prompted a tumble in its share price andsent analysts asking probing questions about the future of what is a nascent industry.

Further concerns hang over Liberate after threats that it might be delisted from NASDAQ because of the firm’s delay in filing financial reports.

The Liberate revelations comes hot on the heals of an admission in August from Gemstar-TV Guide International, the interactive program guide provider, that it would have to restate its 2001 financials because of aggressive accounting practices. Gemstar shares also are down.

The news has opened a debate in the US because accounting for intereactive TV follows the same principles as accounting for software – an area many observers feel is wide open to interpretation.

Investors in US stock markets however, fear the accounting issues are really a side show from the main problem – can interative TV makes its markets grow.